‘Hot fuel’ compensation a hot topic at Chicago meeting

| Friday, August 31, 2007

Automatic temperature compensation devices for retail pumps would not be nearly as expensive or difficult to implement as oil companies and fuel retailers have led their colleagues to believe, according to information presented at a subcommittee meeting of National Conference on Weights and Measures.

OOIDA Foundation Project Leader John Siebert attended the meeting of the Automatic Temperature Compensation Subcommittee Aug. 27-29 in Chicago. He and others presented information to representatives from state and regional weights and measures groups, the American Petroleum Institute, fuel marketers, pump manufacturers and consumer advocate groups.

The topic of the meeting was automatic temperature compensation for retail fuel pumps – something that would standardize the way fuel is sold to consumers and potentially lead to the end of “hot fuel.”

Hot fuel refers to retail gasoline or diesel sold above 60 degrees, a standard used by oil companies and retailers during wholesale transactions to account for temperature fluctuations.

“They were on a fact-finding mission, and this meeting was to bring together as many people as were interested to provide those facts,” Siebert told “Land Line Now” on XM Satellite Radio.

At the retail level, fuel is currently sold without compensation for temperature, expansion or contraction. Some people believe oil companies and fuel retailers have been ripping off consumers with hot fuel to the tune of more than $2.3 billion per year.

The subcommittee will report to two committees of the National Conference on Weights and Measures leading up to a January 2008 interim conference. The full group is also scheduled to meet in the summer of 2008 to conduct another vote on possible language to assist states with implementing automatic temperature compensation – also known as ATC.

“The charge to the committee was, if ATC is going to be accepted in the country, what should these committees have in their hands in order to have the least problems?” Siebert said.

Siebert said subcommittee members liked the idea of implementing a permissive period in which retailers could add ATC to pumps if they wanted to.

“I suggested that the longer that permissive period was, the more the market would drive through competition the completion so that people wouldn’t be waiting,” Siebert said.

Sen. Claire McCaskill, D-MO, has urged that ATC be implemented industry-wide within six years.

Siebert said the subcommittee chairman suggested 10 years, but some people thought that would be too long.

“I suggested six years after the committee chairman said 10 years,” Siebert recounted. “I said, ‘I’ll see your 10 years and lower you six.’ ”

Some retailers have claimed that ATC would be expensive to implement and drive some people out of business. The subcommittee addressed that concern.

“There was a question about whether small, rural stations would be facing hardships ... our idea there was to give them a long time,” Siebert said. “It doesn’t matter (as much) because they’re not pushing a large amount of fuel.”

Legislation offered by McCaskill in the Senate calls for grants to help smaller retailers implement ATC if other funds are not available.

The need for ATC outweighs the need for retailers and oil companies to profit from the sale of hot fuel, Siebert said.

“If you go to a station that has a low price and is not ATC, it’s a pig in a poke,” he said. “You don’t know what you’re buying. But every time you go to a station that would have an ATC logo on its street sign, you would know that you’re going to get the miles out of every tank, regardless of the price it is. You’re going to go the same distance.

“That’s what’s important to (OOIDA) membership – being able to standardize their output through that tank of fuel – not necessarily the price that they’re paying.”

The National Conference on Weights and Measures narrowly missed voting to approve guidelines for states to use on a voluntary basis to implement ATC.

Siebert said he believes the vote will pass in 2008.

“How many votes we pick up from this ... we’ll have to wait and see,” he said.

In Canada, where fuel temperatures are at or cooler than 60 degrees, automatic temperature compensation exists on 75 percent of fuel pumps which account for 90 percent of fuel sales north of the border.

Ross Andersen, a weights and measures official from New York, reported at the meeting that he spent three days in Canada viewing and testing automatic temperature-compensation equipment.

“He says it’s nothing we couldn’t do and it won’t be a big to-do for Americans to do the same kind of thing,” Siebert said.

Since retailers are worried about cost, Siebert said committee members including Andersen – who has spoken out against automatic temperature compensation – talked about cost-cutting measures that retailers could use.

“He found a very good digital thermometer for $200. The estimate had been that the cost was $600. You don’t need a laptop to do the computation. You can do it with a calculator you pick up for $2.50 at Walgreens,” Siebert said.